Morning Bell: Getting Our China Priorities Straight

Conn Carroll /
August 24, 2010

Last week, the establishment media played up reports that China surpassed Japan as the world’s second largest economy as measured by gross domestic product (GDP). Contrary to the amount of attention it received, the development is not as important as it was made to sound. First of all, if the PRC reported its economic data accurately, China probably passed Japan several years ago. Second, after adjusting for different prices within economies —known as purchasing power parity— China actually passed Japan way back in 1995. In other words, this is old news. Lost in these GDP measures, however, is any measure of personal income or wealth. And by that measure the average Japanese citizen is roughly in 40th place in the world, behind the average citizen of Mississippi. China’s GDP per capita, by comparison, is still only about 15 percent of the U.S. level, about the same as El Salvador.